India on World Oil Map

India is well-known for its historical civilization, diverse religions, enormous population, spicy food and tasty tea. But discoveries of significant oil and gas resources in recent years have placed the country in the spotlight of the petroleum industry — music to the ears of a nation with a rapidly growing economy.

India’s tea plantations and the discovery of its earliest oilfield are connected. When British explorers began to map the dense jungles of India’s northeastern Assam region in the 19th century, old reports from farmers of oil seepages in the area drew their attention. In 1865, the Geological Survey of India recommended drilling near some of these seepages. Only two years later, oil was struck in Assam. This was the first mechanically drilled and successful oil well in India, but it did not produce much. The commercial oil industry in India truly began in 1889, when, legend has it, an elephant working for the Assam Railways & Trading Company accidentally stepped into an oil seepage. “Dig! Boy!” cried the excited Englishman. The workers thus drilled the discovery, which is now the well-known Digboi oilfield.

Until the 1960s, India’s oil production was confined to Assam with a daily output of about 5,000 barrels. Then oil was discovered in western India, first in the onshore Cambay Basin in 1958 and later in the offshore Bombay Basin in 1974. These fields increased India’s daily production to 700,000 barrels.

For decades after India got its independence from Britain in 1947, the country maintained semi-socialist protectionist policies. The economy changed drastically, however, after economist Manmohan Singh (India’s current prime minister) became the country’s finance minister in 1991 and the country entered the open international market, facilitating India’s rapid economic growth. The petroleum industry illustrates this economic evolution. For decades, the Indian government largely controlled the petroleum industry. Petroleum exploration and production (upstream activities) were left to the two nationalized companies Oil and Natural Gas Corporation (ONGC) and Oil India Ltd., while refining, distribution and marketing (downstream activities) were conducted by the Indian Oil, Bharat Petroleum and Hindustan Petroleum companies.

More recently, private and foreign oil companies have become active in India, most notably Reliance Industries (a private Indian company), Cairn Energy (Scottish), Nikko Resources (Canadian) and British Gas. In 1999, the Indian government introduced the New Exploration Licensing Policy under the Directorate General of Hydrocarbons, which allows all companies to bid for exploration blocks both on- and offshore India. So far, seven rounds of blocks have been awarded and an eighth is set to go on the market this spring.

Over the last decade, India’s economic liberalization coupled with the increased domestic and global demand for oil and advances in drilling technology in deepwater basins have changed the face of the petroleum industry in the country. This, in turn, has motivated new geologic appraisal of sedimentary basins in India.

More than 300 million years ago, India was part of the Gondwana supercontinent. India’s eastern margin was connected to East Antarctica and its western margin to Africa. The Tethys Ocean washed the northern shores of Gondwana. As the supercontinent began to break up, rift basins formed on India’s western and eastern margins. Some of these rift basins (called the Gondwana basins in India) contain abundant coal resources. About 130 million years ago, as India began to separate from Gondwana, the eastern and western margins of India became shallow sea and finally deepwater basins of the Indian Ocean. Around 50 million years ago, India began colliding with Asia, a tectonic event that sculpted the Himalayas. The Indus, Ganges and other rivers flowing out of the rising Himalayas filled the plains and basins in front of the rising mountains, and also transported considerable amounts of sediments to the Arabian Sea and the Bay of Bengal. Current understanding of this geologic history has provided a new perspective for petroleum exploration in the country.

The recent discoveries in Assam demonstrate excellent potential for new oil reserves even in such a classic and mature petroleum province. Furthermore, petroleum discoveries offshore east India, which are very expensive ventures, were not made (as one may assume) by major international oil companies after extensive drilling, but by relatively small companies (notably Cairn Energy and Reliance Industries) that drilled a relatively small number of wells. The success rate of petroleum discoveries by Reliance Industries in deepwater basins offshore east India has been an impressive 80 percent. These discoveries include a series of gas fields named Dhirubhai, first made in the deepwater Krishna-Godavari Basin in 2002 through 2004 and extended to the deepwater Cauvery Basin in 2007. Last year, new oil and gas fields were found in the deepwater Krishna-Godavari Basin and ONGC announced the first discovery of gas fields offshore of the Mahanadi Basin. There is thus huge potential for future discoveries in these deepwater basins.

Additionally, the oil and gas discoveries in the onshore Rajasthan and Cambay basins indicate the extent to which many of India’s sedimentary basins have remained underexplored. Recent oil and gas discoveries in India are attracting major international companies to enter India's petroleum ventures.

India’s petroleum basins are showing great promise for new discoveries. At the same time, the country’s thirst for energy and fuel is rapidly increasing. India is the world’s fifth-largest energy consumer. Coal still dominates (57 percent), while oil accounts for 28 percent and natural gas supplies 8 percent of India’s energy consumption. India is the world’s sixth-largest oil consumer and imports three-quarters of its oil from overseas (mostly from the Middle East). Therefore, India itself will probably remain the sole buyer of the country’s oil and gas. Still, every step the country can take toward greater energy independence can add to its growing economy.